TENNERO Ltd v PAUL ARNOLD
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE JACK,Mr Justice Jack |
| Judgment Date | 06 June 2006 |
| Neutral Citation | [2006] EWHC 1530 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Claim No: CHY03178 |
| Date | 06 June 2006 |
[2006] EWHC 1530 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Jack
Claim No: CHY03178
CL/2005/PTA/0527
Mr Philip Newman (instructed by Pulig & Co) for the Claimant/Respondent
Mr Nick Parfitt (instructed by Paul Arnold) for the Defendant/Appellant
Hearing date: 15 June 2006
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an application for permission to appeal by Mr Paul Arnold from a decision in an action brought against him by Tennero Limited. Both the facts underlying the action and the procedural history are complex. I will begin with the underlying facts, which I will take shortly, partly because they are so much in dispute.
Majorarch Limited was the developer of a block of flats at Eagle Wharf, Grosvenor Road, London SW1. There was a plan to make a profit by buying three of the flats 'off plan' and by re-selling them when the block was ready for occupation. They included a penthouse flat with a price of £4.44 million. Mr Arnold was involved with the plan. Most of the money was to come from Mr Ibrahim Mubarak, who is a connection of Mr Arnold. In a statement Mr Arnold describes himself as a business man and a bloodstock agent. It is the case of Tennero that he has dual nationality and residences in England and South Africa and possibly also in the United States. Mr Arnold has provided no information about himself other than as I have stated. He uses an accommodation address, namely a box at the offices of Fed Ex in the Old Brompton Road. Mr Humphrey Mainprice, a solicitor, was instructed by Mr Arnold to procure a vehicle for the scheme. Tennero was acquired as the purchaser from Majorarch. A second company incorporated in Mauritius, Cap Verde Holdings, was also acquired. This was probably intended to be the holding company of Tennero. Only one share in Tennero was issued, which was represented by a bearer share warrant. Mr Mainprice put up further money through a family trust. He apparently had and has possession of the bearer warrant. By that possession he claims that he is entitled to give instructions on behalf of Tennero. A dispute arose between Mr Arnold and Mr Mainprice as to who was entitled to act for Tennero. Mr Mainprice states that he held and holds the share for Cap Verde Holdings, but I do not know who he says is entitled to control that company, and so to whom he says that he is ultimately responsible. The scheme to make money from Eagle Wharf failed. There was litigation between Tennero and Majorarch in which Tennero sought to recover its deposits on the flats which it had agreed to purchase. Instructions were given on behalf of Tennero by Mr Mainprice. This culminated in a judgment of Newburger J delivered on 7 November 2003, [2003] EWHC 2601 (Ch). The precise financial consequence is unclear, but it appears unlikely that Tennero made any substantial recovery. In 2000 and 2001 Mr Arnold and an associate of his, Mr Dale, had been paid by Majorarch commissions of £18,000 and £42,000 in connection with Tennero's purchases. Mr Mainprice considered that these commissions were due to Tennero. He was prepared to give Mr Arnold credit for a loan of £8,000 which Mr Arnold had made to Tennero. That left £52,000 as allegedly due from Mr Arnold.
On 11 June 2002, on the instructions of Mr Mainprice, proceedings were issued on behalf of Tennero against Mr Arnold in the Chancery Division of the High Court. The action was later transferred to the Central London County Court. The subject matter of the action was essentially (1) the right to control Tennero and (2) the £52,000. Mr Arnold acted in person. The trial was fixed for 17 May 2004 with an estimate of 3 days. On 1 May Mr Arnold flew to South Africa with a return flight booked for 10 May. While he was there, on 7 May he consulted Dr Christie Roux for treatment for his condition of high blood pressure and was advised not to travel in the immediate future. On that day he obtained a certificate from Dr Roux to that effect. He arranged for the certificate to be faxed by a company, Bloodstock SA, to a friend in London, Mr Egerton, with a message that he was unable to be in London on 17 May. Mr Egerton conveyed this in a letter faxed to the court on 12 May. On 17 May Mr Newman, counsel for Tennero, resisted any adjournment. His Honour Judge Cowell declined to adjourn the trial.
It is convenient next to refer to the relevant provisions of CPR 39. They deal with the power of the court to proceed with a trial in the absence of a party, and with the ability of such a party to have any resulting judgment set aside. They are at the centre of Mr Arnold's proposed appeal. CPR 39.3(1) provides that the court may proceed with a trial in the absence of a party but may also strike out proceedings, claims, defences and counterclaims. Thus CPR 39.3(1) states:
(1) The court may proceed with a trial in the absence of a party but –
(a) ….;
(b) …. ; and
(c) if a defendant does not attend, it may strike out his defence or counterclaim (or both).
CPR 39.3 (3), (4) and (5) provide:
(3) Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.
(4) An application under …paragraph (3) must be supported by evidence.
(5) Where an application is made under paragraph ….. (3) by a party who failed to attend the trial, the court may grant the application only if the applicant -
(a) acted promptly when he found out that the court had exercised its power to ….. enter judgment against him;
(b) had a good reason for not attending the trial; and
(c) has a reasonable prospect of success at the trial.
At the end of his judgment refusing to adjourn the trial Judge Cowell stated 'It seems to me, therefore, that this is a case in which the adjournment should be refused and the claimant can simply prove its case.' Judge Cowell then heard evidence on behalf of Tennero from Mr Mainprice and delivered a short judgment. In it the judge referred to Mr Mainprice's statement, which he impliedly accepted. He referred to a default judgment obtained against Mr Arnold, which had been set aside 'on the ground of non-service', saying that it showed that Mr Arnold knew how to operate the court's procedures. He mentioned Mr Arnold's omission to deal in his statement with Tennero's receipt of a letter. He referred to a cheque in the name of Mr Dale which was used to pay a dentist's bill saying that this increased his suspicions as to the bona fides of Mr Arnold's defence. He then stated 'So, in my judgment, the judgment that was obtained by default ought to be reinstated.' I do not understand why the judge adopted that course, and am uncertain how he would have had power to take it. It was to be expected that he would have delivered a judgment finding the case proved. There is no doubt, however, that he subsequently asked Mr Newman to draw up an appropriate order and that the order drawn up by Mr Newman and accepted by the judge was consistent with the success of Tennero at the trial rather than the reinstatement of a default judgment. Tennero wanted a judgment on the merits because that might be easier to enforce against Mr Arnold. That is why Mr Mainprice was called to give evidence rather than the judge being asked to strike out the defence. Tennero was taking the course referred to in paragraph 2.2(1) of the Practice Direction to CPR 39, namely, to 'prove [its] claim at trial and obtain judgment on [its] claim and for costs.' I think that the explanation can only be that following Judge Cowell's delivery of his judgment referring to the default judgment Mr Newman addressed the judge further and explained, or re-explained, what Tennero wanted. The outcome was the order. The first paragraph stated that Mr Arnold's application for an adjournment was refused. Damages were awarded against Mr Arnold in the sum of £52,000 with compound interest. An order for costs was made with a provision for £15,000 to be paid on account. The judge was not asked to deal with the issues relating to who was entitled to represent Tennero. I should therefore proceed on the basis that there was a trial at which the judge heard evidence, which he accepted, and that he was satisfied that damages should be awarded with compound interest as set out in the order. On that basis the reference by the judge to the reinstatement of the default judgment can be ignored. I should record that efforts have been made to obtain a transcript of the complete proceedings before Judge Cowell, but the tape has been lost. I do not know when the order drawn up by Mr Newman was issued by the County Court. The stamp on it is illegible. In his notice of appeal Mr Arnold states that Mr Newman drafted it on 25 May.
On the day of the trial, 17 May 2004, Mr Arnold booked a flight to return to England for 29 May. He arrived on 30 May and he received a copy of the order of 17 May on 31 May. I presume that he received it when he checked his mail box at Fed Ex. On 18 June 2004 he filed a notice of appeal to the Court of Appeal. The time for appealing was 14 days from the date of the order (not when it was drawn up: see the White Book at 52.4.2.) The notice asked for an extension of time. On the same day he made an affidavit of 21 pages answering the witness statement of Mr Mainprice dated 12 December 2003. It dealt with the merits of the claim against him. His notice of appeal stated that he relied on it. The facts set out in part C of the notice relating to the circumstances in which judgment was given...
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